An online payment account can be useful to Chapters
and SIGs for accepting and making payments.
There are a number of online payment systems that offer special rates to 501(c)(3) organizations and their units, such as ICG Chapters and SIGs. You can find them by doing a web search for keywords like "non-profit" "payment" and "donation." As with a bank account, the important thing is to eliminate monthly fees, and pay as little as possible per transaction. Always read the terms and conditions carefully and find reviews of the online payment system from similar groups.
As an example, PayPay is one of the most popular onlne payment systems. It has a special program for units of 501(c)(3) organizations that charges relatively low per transaction fees (2.2% + $0.30) and there is no monthly fee. A non-profit account is a special kind of "business account" that requires documentation to prove non-profit status.
Your Chapter or SIG board should approve a motion authorizing your Treasurer to open a PayPal account. PayPal will require the Treasurer to provide a letter on Chapter or SIG letterhead, signed by the Chapter or SIG Secretary, authorizing the person who will create the PayPal account to operate the account for the group. Most word processor programs provide attractive letterhead templates that you can customize. We suggest having your Secretary develop a letterhead template for your group.
Here is the recommended wording:
To whom it may concern,
This letter authorizes _______________________ (paypal@sasquatchvalleycostumers.costume.org) as the main account holder on the Sasquatch Valley Costumers' Guild Paypal account, and they will be responsible for all Paypal account-related activities. The authorized person (paypal@sasquatchvalleycostumers.costume.org) is to act for and on behalf of the organization in handling all matters related to the management of its PayPal business account.
Signed:PayPal requires U.S. based organization to have a Taxpayer ID issued by the U.S. Internal Revenue Service. Banks in most other countries have similar requirements. In the U.S., it is know as a Employer Identification Number (EIN).
Applying for an EIN is easy and can be done online by visiting this IRS webpage. You will receive an EIN at the end of the application process. Save a copy of the page that shows the new EIN in PDF format as part of the Chapter or SIG records maintained by the Secretary.
The PayPal registration process requires an email address that is used as the login name for the account. Never use a personal email address to set up a Chapter or SIG PayPal account. Instead, set up a special email alias on your web hosting account for use with your PayPal account (e.g. paypal@sasquatchvalleycostumers.costume.org). That way, it is easy to add and remove people from the alias.
We strongly suggest that at least two people (e.g. Treasurer and Secretary) be on this alias and know the password and any security information for the online account. See Creating an Online Presence for information on setting up a web hosting account and email aliases.
PayPal has a special landing page for setting up a non-profit account that also provides additional information. Review the relevant information before starting the registration process.
You will be setting up a PayPal Payments Standard business account. Once you have provided some basic information, you may be asked the kind of business. Choose "non-profit." You may also be asked to identify the type. Choose "Educational" because the ICG is a 501(c)(3) non-profit educational organization.
You will need to provide your organization’s bank account information to link to your PayPal account. This allows you to transfer funds from your PayPal account to your bank account. The registration process will also ask for information about the person setting up the account. This is normally the Chapter or SIG Treasurer. It is easy to add and remove people from the account once it set up.
Once you have completed opening up the account, you will receive an email message within one or two days, asking you to submit documentation on your non-profit status online. The email will provide a deadline for submitting this documentation. If you miss the deadline, your account may be restricted or cancelled. Be patient. It is not uncommon for PayPal to ask for additional documentation after the first round, or for you to resubmit documentation if it is not in the correct form.
The requestion documentation may include:
Statement of use for the account. Provide a statement describing how your Chapter or SIG plan to use the account. This should be on Chapter or SIG letterhead.
Only include the word "donation" in your statement if you plan to accept donations through this account, because you will be asked to submit substantially more documentation in that case. Here is an sample.
Statement of Use for PayPal Account
The Sasquatch Valley Costumers' Guild (USVCG) is an educational costuming organization based in the Upper sasquatch Valley in the state of Confusion. It is a unit of the International Costumers' Guild, a 501(c)(3) educational organization under U.S. tax law (EIN: 52-1656188).
USVCG Members pay a $20 per year membership fee, of which $8 is remitted to the ICG to cover its membership fee. We also hold member meetings and other events that may require payments to attend, and we may also need to purchase supplies or pay honorariums to instructors who teach classes. We plan to use Paypal for the following functionality:
We are also in the process of developing a website and a Facebook presence, and plan to integrate online-payment functionality. The web site is likely to be very low volume, so Paypal is a logical choice as payment of dues and paymenets for events are per-transaction rather than per-month
Organization summary. Summarize the purpose of your Chapter or SIG. If your group has a description and mission statement, use that as the basis of this document. This must be on your Chapter or SIG letterhead. Here is a sample.
Organizational Summary
The Sasquatch Valley Costumers Guild (USVCG) serves the costuming community in the Upper Sasquatch Valley area of the state of Confusion. The USVCG is a chapter of the International Costumers' Guild, a 501(c)(3) non-profit under U.S. tax law (EIN: 52-1656188). Membership is open to anyone who lives in the geographical area served by the USVCG.
The mission of the the USVCG is to encourage and facilitate the study, appreciation, creation and wearing of costumes as an art form. Our objectivies are to:
Bank statement or voided cheque. If your group has ordered cheques on your bank account, you can submit a scan a voided cheque. Otherwise, you can scan a copy of your first bank statement or print the first statement from your online banking account to PDF. If you have just opened your bank account, you may also be able to scan the document provided by the bank that shows the account information.
Proof of non-profit status. You should upload PDF files of the following:
Once your PayPal non-profit account is set up, you can add PayPal buttons to your Chapter or SIG website to accept payments for memberships, donations, and event registrations. A page on the PayPal website describes this process, including using their online tool to generate the HTML code for the button that you can incorporate into the appropriate pages on your website.
When setting up a payment button, be sure to consider that PayPal charge your Chapter or SIG 2.2% plus $0.30 per transactions. If you group does not want to absorb this fee, you will need to add the transaction cost to the price associated with the button. You should genarally offer a payment alternative such as sending a cheque so the payee can avoid this fee.
You can see an example of using PayPay to create a shopping cart for dues payments on the Silicon Web Costumers' Guild "Join Us!" webpage. This uses payment buttons that are preconfigured with the description and amount. For examples of donation buttons, see the ICG "Make a Donation" webpage. These allow the donor to specify the amount during checkout.
If your Chapter or SIG has events or activities that require a payment, you can integrate PayPal into your registration process by combining it with an event webpage and a SurveyMonkey registration page. See Automating Event Registration with SurveyMonkey and PayPal for details.
If your Chapter or SIG needs to accept credit or debit cards as payment at events, PayPal has a special program called PayPal Here. It enables you to use a small card reader that plugs into an Android phone, or Apple iPhone, or iPad, and works with a special applet to process credit or debit card payments. PayPal charges a 2.7% processing fee on transactions. The applet lets the card owner sign on the smartphone screen with a finger, and emails the receipt.